Special Report Data on Subscription Content -- Top Challenges, Revenue Sources and Marketing Tactics Compared
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1 Practical Case Studies & Know-How MarketingSherpa 2009 Data on Subscription Content -- Top Challenges, Revenue Sources and Marketing Tactics Compared Special Report
2 Introduction Paid content publishers must navigate the challenges of rapidly changing technologies and an ongoing recession. To determine how those factors impact content marketers, MarketingSherpa in April and May of 2009 fielded a study in partnership with the Specialized Information Publishers Foundation, the nonprofit research and industryoutreach arm of the Specialized Information Publishers Association (SIPA). The goal was to explore the challenges and opportunities facing publishers, their use of marketing tools, and plans for investment and evolution. Where appropriate, we ve broken out broken out the respondent groups according to their publishing focus: o B2C o B2B online products o B2B offline products MarketingSherpa Research Director Stefan Tornquist presented the results of this survey in June at SIPA s 2009 International Conference. We ve also created the following Special Report to highlight 10 data charts that reflect the top issues and opportunities in the paid content industry.
3 Insight #1. Top challenges: Subscriber acquisition and retention, competition from free sources Challenges to Paid Subscription Publishers by Type Not surprisingly, acquiring new subscribers was the top challenge cited by all marketers in our survey group. When the economy slows, sales of subscription content take a hit alongside lots of other products. Subscriber retention was also a significant challenge for most marketers -- with one interesting difference: B2B marketers focused on online products were less likely to report subscriber retention as a top challenge. That result may reflect an advantage for B2B publishers who can demonstrate the value of their digital products: Online content and data services for the B2B market are often seen as mission-critical information that can be more easily integrated into customers day-to-day job functions than a print product. Another striking difference came in marketers assessment of competition from free sources. While all groups reported some challenge from free competitors, the biggest response came from marketers of offline B2B content. Why? The proliferation of blogs and social media has introduced hundreds of expert voices to virtually every niche of publishing. Consultants and thought leaders from related businesses have found these media to be effective channels for branding
4 themselves and their companies, as well as for generating leads and public relations opportunities. Publishers with an online component can combat these free sources by providing a mixture of free and paid content on their websites. Using free content, such as blogs or video, or providing a tiered subscription model that lets nonsubscribers access some information from your site, provides a way to demonstrate your value to potential customers. It also gives you a channel for upsell-marketing to paid subscriptions. So if all your content is offline or behind a pay wall, consider ways to provide some access to visitors who aren t yet subscribers. Insight #2. Conversion rates are declining Conversion Rate Changes 2008 vs For the most part, conversion has suffered in the downturn. For some types of products, the trend was already negative, and it s difficult to tease out the spike related to the recession from existing patterns. - The only exceptions are Subscription Websites, where more marketers cited improvement rather than decline. It appears that some fraction of the money that s normally spent on alternative information products, such as attending conferences and subscriptions to hard copy
5 publications, is being moved online. Subscription Websites are viewed as an inexpensive, useful alternative. Unfortunately, that movement is far from a zero-sum game, and Web revenues rarely make up for what s lost on the print side. But diversifying your product lines remains a crucial way to ride out volatility in your market. Companies that began with online offerings or changed their focus early on have the advantage over those who have used their Web presence as an offline driver. From conversion rates to ROI and revenue reports, those Web-only and early adopting companies see more silver linings in the current clouds. Insight #3. B2B publishers face declining revenue from core products Revenue Changes by Product B2B w/online Focus
6 Revenue Changes by Product B2B w/offline Focus Newsletter subscription sales and advertising revenue remained the major sources of revenue for B2B publishers of offline and online products. But differences emerged when we asked B2B publishers whether revenue from specific products was increasing, declining, or staying the same. - B2B publishers with an online focus reported revenue gains in several areas. Among the biggest gainers: o Site licensing -- 72% reporting an increase in revenue o Consulting -- 63% reporting an increase in revenue o Audioconferences/Webinars -- 52% reporting an increase in revenue o Content licensing/syndication -- 50% reporting an increase in revenue - However, B2B publishers with an online focus reported declining revenue from several important product lines, including: o Magazine subscriptions -- 75% reporting a decrease in revenue o Newsletter subscriptions -- 64% reporting a decrease in revenue o List rentals -- 63% reporting a decrease in revenue o Conferences/Seminars -- 57% reporting a decrease in revenue - By contrast, B2B publishers with an offline focus saw slim revenue gains overall. The only areas of growth these publishers reported were in: o Audioconferences/Webinars -- 53% reporting an increase in revenue
7 o Subscription websites -- 50% reporting an increase in revenue - B2B publishers with an offline focus saw similar revenue declines as their online peers: o List rentals -- 72% reporting a decrease in revenue o Newsletter subscriptions -- 69% reporting a decrease in revenue o Conferences/Seminars -- 65% reporting a decrease in revenue o Magazine subscriptions -- 46% reporting a decrease in revenue The issue for both groups is that increases in digital and alternative content sources don t make up for corresponding offline reductions dollar for dollar. Unfortunately, this is resulting in slimmer marketing budgets, which in turn allows more nimble online competitors to take market share. Insight #4. B2C publishers face even bigger revenue declines from core products Revenue Changes by Product B2C Paid content providers in the consumer world are taking a harder hit than B2B publishers in the current economy. That trend may reflect the proliferation of free alternatives for many types of B2C content. B2C marketers reported revenue declines in key product areas, such as: o List rentals -- 65% reporting a decrease in revenue o Newsletter subscriptions -- 62% reporting a decrease in revenue o Advertising/Sponsorships -- 50% reporting a decrease in revenue
8 o Subscription websites 44% reporting a decrease in revenue Maintaining subscription growth during an economic downturn requires marketers to get creative with their product mix, pricing strategies and marketing tactics. A few ideas suggested by subscription marketing pros in a recent MarketingSherpa article include: - Developing new, lower-cost products that reflect the times Zagat Survey, the restaurant and entertainment review publisher, in December 2008 lunched a new line of dining guides called America s Best Dining Deals. The guides repurposed content from their core restaurant rating and review service to highlight 200 of the best dining values in 10 major cities. They were sold for $5.95, and were promoted as a small price to pay for great savings throughout the year. - Testing a lower-tier membership level A light version of your product or lower-tier pricing can appeal to customers cutting back on expenses. Jesse Lipson, President, ShareFile, offers a pay-per-use version of his company s online file-sharing service to customers who cancel their subscriptions because they don t use the service enough to justify a monthly subscription. Roughly 5% to 10% of canceling customers accept the pay-per-use plan, says Lipson. - Accepting alternative payment methods Offering alternative online payment options, such as PayPal and BillMeLater, can help marketers overcome credit-card processing problems as customers max out their cards, consolidate debt, or simply struggle to pay their bills. These systems let customers pay bills from a checking account. Insight #5. Marketing budgets shifting from offline to online -- but be careful
9 Attitudes Toward Online vs. Offline Marketing Spending The chart above looks at organization attitudes toward marketing through the downturn in general, and the divide between online and offline expenditures specifically. The shift from offline to online marketing, and from branding to direct-response campaigns, is apparent. Nearly a third of publishers are taking an aggressive view toward their online marketing budgets compared to only 6% who say the same for offline budgeting. Before following the crowd, it s helpful to keep several things in mind: - Marketing shouldn t get cut to the bone Studies dating to the Great Depression have correlated increased or stable marketing spends with faster recovery and growth. As enticing as it is to cut marketing expenses, you may be doing so at the long-term expense of your business. - Offline impressions are inexpensive Maintaining a strong brand in a downturn can distinguish you from the majority of companies who are laying low. Agile companies have used downturns to gain share and market position on former industry leaders. One way to take advantage of the troubles facing publishers is to leverage the inexpensive impressions that are available.
10 - Don t forgo all online brand marketing in favor of direct While the Internet lends itself to the direct and measurable, brand marketing remains an important element. Many companies have found that when they moved too radically toward the greener pastures of paid search and , while cutting brand marketing, their direct marketing got more expensive on an acquisition basis. Brand marketing drives those searchers, subscribers and even Twitter followers. Insight #6. A mixture of online and offline marketing tactics receive high rankings Marketing Tactics Compared A quick explanation of this chart: The display represents marketers take on several different marketing tactics: o The size of each bubble corresponds to the number of marketers using the tactic o Where the bubble lies from left to right indicates that tactic s contribution to revenue o Where the bubble lies from top to bottom indicates the percentage of marketers reporting good or very good ROI for the tactic - Interestingly, the top spots are taken by two very different tactics: House and direct sales. The former being the cheap online answer to direct mail, and the other among the most expensive of offline tactics.
11 However, our research and case studies have shown that combining online and offline messaging within campaigns can enhance response rates -- particularly in higher-priced or complex sales, where one touch is seldom enough to produce a conversion. - Landing in the middle of the pack are popular marketing tactics, including: o SEM o SEO o Telemarketing But it should be noted that many respondents didn t know the contribution to revenue of many listed tactics. For example, a whopping 52% of respondents reported not knowing how effective their SEO efforts are. Those responses have been removed from the sample, but are emblematic of a general lack of reliable information in the paid content industry. Insight #7. Marketers still unsure of the value of social media marketing Use, Effectiveness and Time Demands of Social Media Marketing When it comes to social media, we have barely reached the stage of knowing what we don t know. In the chart above, we ve included the percentage of respondents using a given tool that report that they are unsure of its efficiency.
12 In many cases that figure far outpaces the percentage of those who have an opinion on ROI. This is exemplified by Twitter, where half of the respondents using the microblogging tool don t know what effect it is having. The highest scoring tactics are also the most work. Maintaining a unique online community and the stalwart discussion group rate well in their effectiveness, but naturally require more time and/or budget than other tactics in this category. It s much too early to let what appear to be low ROI evaluations prevent your organization from exploring the opportunities of social media marketing. Just as with lists, people s willingness to follow Tweets or befriend your page will likely wane in time. Now is the moment to build a network and to develop skills in this emerging area. There are already examples of consumer and business focused companies that have used these tactics to great effect, but we re still at the case study stage, rather than having aggregate data. By that point, it will be significantly more difficult to have the kind of growth that is possible today. Insight #8. Testing is essential to weather the tough economy Online Tests Rated
13 Offline Tests Rated Providing great content alone isn t always enough to withstand a recession. Continually improving the methods you use to attract and retain subscribers allows you to make the most of your marketing investments. That means continued testing of even small elements of your marketing and conversion process, such as landing pages, subject lines, and offer copy. These two charts compare the effectiveness of specific online and offline tests. The bubbles reflect both the effectiveness of the test (how much improvement can be achieved), and the cost of conducting the test. For tests in an online setting: - Landing page tests score well Simply testing variations of your landing page copy can deliver some of the best results at the lowest cost. Marketers also reported good results from landing page design tests, but at a higher cost to implement. - Price testing is not as important as you might expect
14 Online marketers gave the lowest effectiveness score for price testing -- despite price being, theoretically, the number one element of an offer. General offer testing does better, but still lags behind tests that focus on the presentation of information and the list itself. For tests in an offline setting: - List testing is a given So much depends on the quality of your list and how you segment offers that it almost goes without saying list tests are essential. - Pay attention to how content is presented As in online testing, testing what you say and how your message is delivered trumps price and offer. Useful links related to this article 7 Tips for Tough Economic Times from Subscription Marketing Pros Special Report: New Data for Online Publishers - Which Subscription Tactics Work Best? Special Report: Group Subscriptions to Online Content: New Data and Tips on Top Strategies Specialized Information Publishers Association
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